Cullen Reiterates Commitment To New Zealand Business Tax Reforms

by Mary Swire, Tax-News.com, Hong Kong

26 January 2006

New Zealand's Finance Minister Michael Cullen reiterated yesterday that the government remains committed to meaningful reform of the country's business tax regime.

The review of business taxation forms a key part of the post-election confidence-building measures with the United Future and New Zealand First Parties, and is aimed at giving better incentives for productivity gains and improved competitiveness with Australia.

Since clinching a narrow victory in September's election, the ruling minority Labour government is dependent on the support of these two parties.

However, while the opposition parties have expressed their support for a cut in New Zealand's 33% corporate tax rate, Dr Cullen has said in previous statements that the reforms were not designed to "tinker" with tax rates but bring about "bold" changes in the business tax regime.

"This a complex task, but one that could pay real dividends for the economy," Dr Cullen commented in a statement issued on Wednesday.

"For opposition finance spokesman John Key to suggest otherwise shows how ignorant he is of the realities of policy making," he remarked,

"John Key's only solution seems to be to simply cut taxes which will only put further pressure on interest rates and the dollar thereby creating more pain for exporters and workers," Dr Cullen concluded.

Draft proposals on business tax reform are scheduled to be published for consultation by the government in mid-June.

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